Investment advice is usually “buy low, sell high” – but the real estate market lately requires a different approach. With houses flying off of the market, and little inventory to go around, how can you succeed in purchasing a home? Learn how to navigate a hot real estate market in this video blog.
Navigating a Hot Real Estate Market
- In an upmarket remember the seller has all the power. This cuts two ways generally, as most of us are selling in order to have to buy. Simply understanding this can help you best strategize timing and cadence to listing and purchasing.
- Know your budget and stick to it. Where I see the most people get burned is they tell themselves, and pocketbook, one thing, yet when push comes to shove throw caution to the wind.
- Patience my dear. I know it is easier said than done, but you have to try your best to stay patient. It can get very frustrating bidding on a dozen houses and getting none. That said I find with patience comes the smartest outcomes.
- Get creative. Again, remember that the seller is king so you can name your terms. For instance, I am a big advocate of selling and agreeing to rent back. That way you can sell your home at top dollar and rent your home back for a handful of months. This both buys you time to find the perfect home, and have maximum flexibility in doing so. Another great strategy I recommend is using your non-retirement investments to get a short-term loan to bridge the buying/selling gap.
- Know what you can compromise and what you can’t. This one speaks to the mindset of the buyer. It may be hard to stand out when there are 4 bids on a home all at full price. When that is the case, how can you position yourself to be on top? You can do things like offer all cash, which most people don’t realize doesn’t mean it all has to come from your checking account. It can easily come from a mortgage company; it just means you are waiving your mortgage contingency. Also, a quick close is very appealing to the seller. On the other hand, be wary of waiving a home inspection. Doing so could be an extremely costly mistake!
- Act quickly and know the market. Being you are now patient home buyers (see tip 3) you should be an expert on the market you are trying to purchase in. That said, the early bird sometimes gets the worm. If you are the most knowledgeable, and on top of the market person, you can quickly sniff through a fair deal and move quickly.
- Don’t get emotional. I’m tearing up just by writing this. Staying calm and not leading with your emotions is always a smart decision when it comes to real estate. There are so many goofy things that happen in this kind of market – you simply can’t let them affect your emotions. If you do you are very likely to make a costly error.
- Rent. Did I just use that four-letter word? Rent! I know it is taboo to many of you, but selling your home to rent for a year or two can be a brilliant strategy. This can allow you to take your chips off the table and not be forced to overpay or act irrationally. Additionally, you may find this is single-handedly one of the few ways to actually sell high and buy low in real estate.
- Get comfortable being uncomfortable. Yes, buying and selling in a super-hot market like this can be very unnerving. The pace is fast, you’ll compromise on things you didn’t think you’d have to, and your brain likely hasn’t caught up to process the reality. What is my best advice to you hear? Get over it! Sorry to be so harsh but better you hear it from me now so you can, well get over it.
- Arm yourself with a great team. I suggest having a great realtor, mortgage professional, CPA, attorney, and financial planner in place. You’ll need to lean on all these individuals during these times. Having professionals that surround you to help navigate these choppy waters can often be the edge you need to succeed.